Dear Shareholders,
 
 The Directors have pleasure in presenting the 64th Annual Report and
 Audited Accounts of the Company for the year ended 31st March, 2011.
 
 As the Management Discussion and Analysis section focuses on your
 Company’s strategies for growth, in depth, your Board is providing only
 a brief overview in this report.
 
 CONSOLIDATION OF CEMENT BUSINESS
 
 The demerger of the Company’s Cement business into a separate
 subsidiary, Samruddhi Cement Limited (SCL), and the subsequent merger
 of SCL with UltraTech Cement Limited (UltraTech) (another subsidiary)
 were completed.  This has paved the way for the shareholders of Grasim
 to participate directly in a focussed entity engaged in the Cement
 business.
 
 We are confident that this pragmatic step will yield rich dividends in
 the long run and lay a strong foundation for the future growth of your
 Company.
 
 GROWTH OF THE EXISTING BUSINESSES
 
 Expansion of Viscose Staple Fibre (VSF) Capacity
 
 A total capex of Rs. 2,400 crore has been approved by the Board for the
 VSF business. This includes the cost of setting up a 120,000 TPA
 greenfield VSF plant at Vilayat (Gujarat) and expansion of its capacity
 at Harihar (Karnataka) by 36,500 TPA.
 
 In line with its strategy of resource de-risking critical inputs, your
 Company will also establish a Caustic Soda plant at Vilayat with a
 capacity of 182,500 tons.
 
 Acquisition of Domsjo Fabriker AB, a Swedish Pulp Manufacturing Company
 
 Your Company has, 1/3rd stake in Aditya Holding AB, Sweden, which
 controls Domsjo Fabriker AB, Sweden, a leading manufacturer of
 specialty pulp used in the manufacture of VSF.
 
 Expansion of Cement Capacity
 
 A total capex of Rs. 11,000 crore has been approved by the UltraTech
 Board. This includes brownfield expansions aggregating to 9.2 million
 TPA at Chhattisgarh and Karnataka units which are expected to be
 operational from early FY14. In the existing projects, UltraTech is
 strengthening logistic support, waste heat recovery, etc., for future
 growth.
 
 Acquisition of ETA Star Cement, UAE
 
 In September 2010, UltraTech completed the acquisition of ETA Star
 Cement Company LLC with its assets comprising of 2.3 million TPA
 clinker facility and grinding units of 2.1 million TPA in UAE, 0.4
 million TPA in Bahrain and 0.5 million TPA in Bangladesh. With this
 acquisition, UltraTech gained direct access to the markets in the
 Middle East and neighbouring regions.  Consequent to this acquisition,
 UltraTech’s capacity stands augmented at 52 million TPA.
 
 FINANCIAL PERFORMANCE
 
 Your Company has reported improved results on the back of superior
 performance from VSF, a core business of your Company, which moved in
 tandem with the other competing fibres.
 
 The performance of your Company’s Cement subsidiary, UltraTech, was
 impacted mainly due to the slowdown in the realty sector.
 
                                                  (Rs. in Crore)
 
                                Consolidated           Stand-alone
 
                           2010-11   2009-10    2010-11      2009-10
 
                                                 Continued     Total
                                                 Business#    (As 
                                                             Reported
 
 Gross Turnover       23,570.54  21,710.54 4,891.40 4,111.79  8,841.79
 
 Gross Profit          4,991.17   5,987.72 1,771.49 1,539.75  2,851.92
 
 Less: Depreciation    1,138.37     994.71   176.29   151.28    351.14
 
 Profit before Tax and 
 Exceptional Item      3,852.80   4,993.01 1,595.20 1,388.47  2,500.78
 
 Tax Expenses            957.61   1,570.48   413.49   402.27    744.75
 
 Profit after Tax from 
 Ordinary Activities   2,895.19   3,422.53 1,181.71   986.20  1,756.03 
 Extraordinary Items
 
 - Profit on Sale of 
 Sponge Iron Unit         --        336.07    --      336.07    336.07
 
 - Profit after Tax 
 after Extraordinary
 
 Activities            2,895.19   3,758.60 2,092.10  1,181.71 1,322.27
 
 Add: Share in Profit
 /(Loss) of
 Associates               43.78      51.05    --        --       --
 
 Less: Minority Interest 659.96     714.12    --        --       --
 
 Net Profit            2,279.01   3,095.53  1,181.71 1,322.27 2,092.10
 
 Amount Transferred on Change in Stake
 in Subsidiaries/Joint 
 Ventures               (350.01)      --      --                 --
 
 Debenture Redemption 
 Reserve
 Written Back             --         39.83    --                  5.00
 
 Balance brought forward 
 from
 Previous Year         3,499.23   3,406.07  2,219.07          2,180.97
 
 Surplus Available for 
 Appropriation         5,428.23   6,541.43  3,400.78          4,278.07
 
 Appropriations:
 
 - Reserve Fund            0.29       0.68     --                 --
 
 - General Reserve     3,618.55   2,700.00  2,500.00          1,750.00
 
 - Debenture Redemption
    Reserve               65.17      12.50     --                 --
 
 - Proposed Dividend     183.40     275.05    183.40            275.05
 
 - Corporate Tax on
    Dividend              40.33      53.97     13.66             33.95
 
 - Balance carried to 
 Balance Sheet         1,520.49   3,499.23    703.72          2,219.07
 
                       5,428.23   6,541.43  3,400.78          4,278.07
 
 #Results for the year ended 31st March, 2010, for Continued Businesses
 (excluding the results of Sponge Iron/Cement businesses sold/demerged
 w.e.f. 22nd May, 2009 and 1st October, 2009, respectively) have been
 given for better comparison.
 
 At the consolidated level, while there is no change in the Revenue and
 Operating Profit of the Company, on account of the demerger/merger of
 the Cement Business, the Net Profit after minority share has been
 impacted due to the direct participation of the Company’s shareholders
 in SCL/UltraTech on demerger/merger of the Cement business of the
 Company, as explained above.
 
 DIVIDEND
 
 Your Board has recommended a dividend of Rs. 20 per share, subject to
 your approval. The total outflow on account of the dividend (inclusive
 of the Corporate Tax on Dividend) would be Rs. 197.06 crore.
 
 EMPLOYEE STOCK OPTION SCHEME (ESOS)
 
 During the year, 71,297 Employee Stock Options were granted to certain
 eligible employees of the Company. Out of the Options granted in the
 earlier years, 42,909 Options were vested.
 
 During the year, some of the option holders have exercised options
 thereby converting 15,207 options into shares of Rs. 10 each and,
 accordingly, 15,207 shares were allotted to the concerned option
 holders.
 
 The details of Employee Stock Options granted pursuant to the Employee
 Stock Option Scheme -2006 (ESOS-2006), as also the disclosures in
 compliance with Clause 12 of the Securities and Exchange Board of India
 (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999, are set out in Annexure ‘A’ to this Report.
 
 DEBENTURES AND TERM LOANS
 
 Your Company has not raised any long term loans.  Term loans
 aggregating Rs. 38 crore have been repaid.
 
 AWARDS AND ACCOLADES
 
 Some of the significant accolades earned by your Company during the
 year include:
 
 - Greentech Environment Award 2010 - Gold: Harihar Polyfibers,
 Harihar.
 
 - Most Innovative Environmental Project Award 2011 by CII Godrej Green
 Business Centre: Harihar Polyfibers, Harihar.
 
 RESEARCH AND DEVELOPMENT
 
 Your Company’s unwavering commitment to R&D and to sustainably surpass
 “Quality” requirements in a holistic manner has been endorsed by
 accreditations from the Ministry of Science and Technology, Government
 of India, for the newly set up “Wood and Pulp Research Centre” at
 Harihar (Karnataka) and the “Textile Research and Application
 Development Centre” (TRADC) at Kharach (Gujarat). The “Birla Research
 Institute for Applied Sciences” already enjoys this status.
 
 The Pilot Plant facilities at the new state-of-the- art, “Wood and Pulp
 Research Centre,” became operational in July 2010. It fosters
 continuous improvements in process, product quality and environment
 management of the Pulp plants through ongoing projects in areas related
 to Wood morphology, pulping and bleaching optimisation and quality
 improvement. This centre will help the business in evaluating
 suitability of various species of wood for DG pulp and aid customised
 process design. The Birla Research Institute for Applied Sciences is
 actively engaged in development and patenting of a novel next
 generation fibre besides having developed process for Flame Retardant
 Viscose Fibres for which patents have been obtained. TRADC has been
 facilitating the market seeding of new fibres so developed through
 evolving their optimal downstream processing techniques and producing
 test quantities of finished products with them. These endeavours have
 resulted in the Market launch of a Denim collection based on our
 solvent spun fibre “Excel” as also a special trousers collection based
 on a new colour fast spun dyed fibre. Work is ongoing to develop and
 seed specialty products based on functional fibres providing added
 value and exclusive convenience to our end-customers. All our R&D
 Centres are being further strengthened with new equipment and
 analytical instruments.
 
 Towards upgrading our environmental standards, a plant based on a novel
 process to reduce emissions has been commissioned at one of our
 production lines for confirming the results obtained in pilot trials.
 
 HUMAN RESOURCES
 
 Your Company believes that Human Resources play a very critical role in
 its growth. Your Directors are pleased to inform you that the Aditya
 Birla Group, of which your Company is a part, has been declared as one
 of the Best Employers in India by the Aon – Hewitt survey conducted
 recently. The Group ranked second among two hundred other Indian
 organisations which took part. The process entailed a rigorous
 six-month exercise involving HR systems and processes audit, online
 survey with several employees, face to face meetings with Leadership
 teams, HR and a cross section of employees.
 
 Going forward, attracting and retaining talent will be a key challenge.
 Various initiatives have been launched to provide growth opportunities
 to employees and stem attrition. Notable initiatives for the current
 year include the rollout of the Employee Value Proposition and the
 Career Portal Platform to provide visibility of career opportunity to
 the employees.
 
 CORPORATE GOVERNANCE
 
 Your Directors reaffirm their continued commitment to good corporate
 governance practices. Your Company fully adheres to the standards set
 out by the Securities and Exchange Board of India for Corporate
 Governance practices and has implemented all of its stipulations.
 
 As required by Clause 49 of the Listing Agreement of Stock Exchanges, a
 separate section on Corporate Governance together with a certificate
 from your Company’s statutory Auditors, forms part of this Annual
 Report.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 As stipulated in Section 217(2AA) of the Companies Act, 1956, your
 Directors subscribe to the “Directors’ Responsibility Statement” and
 confirm that:
 
 i) in the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 ii) the accounting policies selected have been applied consistently and
 judgements and estimates are made that are reasonable and prudent so as
 to give a true and fair view of the state of affairs of your Company as
 at the end of the financial year and of the profit or loss of your
 Company for that period;
 
 iii) proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of this
 Act for safeguarding the assets of your
 
 Company and for preventing and detecting fraud and other
 irregularities; and
 
 iv) the annual accounts have been prepared on a going concern basis.
 
 CONSOLIDATED FINANCIAL STATEMENTS AND RESULTS OF SUBSIDIARY COMPANIES
 
 The Consolidated Financial Statements have been prepared by your
 Company in accordance with the applicable Accounting Standards (AS-21,
 AS- 23 and AS-27) issued by the Institute of Chartered Accountants of
 India and the provisions of the listing agreement with the Stock
 Exchanges.  Together with the Auditors’ Report, these form part of the
 Annual Report.
 
 In terms of the recent General Circular of the Ministry of Corporate
 Affairs (MCA), Government of India, the copy of Balance Sheet, Profit
 and Loss Account, Directors’ Report, Auditors’ Report, etc., of the
 subsidiary companies are not attached with the Annual Report of the
 Company. The related information on the Annual Accounts of the
 subsidiary companies shall be made available to the shareholders of the
 Company and of the subsidiary companies, who shall seek such
 information at any point of time. The Annual Accounts of the subsidiary
 companies will also be kept for inspection by any shareholder at the
 Registered Office of the Company and that of the subsidiary companies
 concerned. The Statement pursuant to Section 212 of the Companies Act,
 1956, containing the details of the Company’s subsidiaries and the gist
 of the financial performance of the subsidiary companies forms part of
 the Consolidated Financial Statements of this Annual Report.
 
 PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
 
 Information on Conservation of Energy, Technology Absorption and
 Foreign Exchange Earnings and Outgo, stipulated under Section 217(1)(e)
 of the Companies Act, 1956, is set out in a separate statement,
 attached to this report (Annexure ‘B’) and forms part of it.
 
 In accordance with the provisions of Section 217(2A) read with the
 Companies (Particulars of Employees) Rules, 1975, the names and other
 particulars of employees are to be set out in the Directors’ Report, as
 an addendum thereto.  However, in tandem with the provisions of
 
 Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and
 Accounts as set out therein are being sent to all members of the
 Company excluding the aforesaid information about the employees. Any
 member, who is interested in obtaining such particulars about
 employees, may write to the Company Secretary at the Registered Office
 of the Company.
 
 DIRECTORS
 
 Subject to your approval, the Board of Directors has appointed Mr.
 Adesh Gupta as the Manager of the Company, in addition to his present
 role as the Whole-time Director and CFO of the Company, w.e.f. 22nd
 March, 2011 to 2nd October, 2014.
 
 Mr. M.L. Apte, Mr. R.C. Bhargava, Mrs. Rajashree Birla and Mr. Cyril
 Shroff, the existing Directors of the Company, retire from office by
 rotation and being eligible, offer themselves for re- appointment.
 
 A brief resume of the Directors being re- appointed, is incorporated in
 the Corporate Governance Section, which forms part of this Annual
 Report.
 
 It is with great pride that we share with you that the following Awards
 have been conferred on your Director, Mrs. Rajashree Birla:
 
 >- the exalted ‘Padma Bhushan Award’ by the Government of India in
 recognition of her exemplary contribution in the area of social work;
 
 >- the prestigious ‘Global Golden Peacock Life Time Achievement Award’
 for Community Development for her Outstanding Contribution towards
 Community Development and Social Welfare; and
 
 >- the coveted ‘AIMA Managing India Award’ for the “Corporate Citizen
 of the Year”.
 
 AUDITORS
 
 The Board, on the recommendation of the Audit Committee, has proposed
 that M/s. G.P. Kapadia & Co., Chartered Accountants, Mumbai and M/s.
 Deloitte Haskins & Sells, Chartered Accountants, Mumbai, be
 re-appointed as the Joint Statutory Auditors of the Company, to hold
 office from the conclusion of the ensuing Annual General Meeting till
 the conclusion of the next Annual General Meeting of the Company. M/s.
 G.P. Kapadia &
 
 Co., Chartered Accountants, Mumbai, and M/s.  Deloitte Haskins & Sells,
 Chartered Accountants, Mumbai, have forwarded their certificates to the
 Company, stating that their re-appointment, if made, will be within the
 limit specified in that behalf in Sub-section (1B) of Section 224 of
 the Companies Act, 1956.
 
 The Board, on the recommendation of the Audit Committee, has also
 proposed that M/s. Vidyarthi & Sons, Chartered Accountants, Gwalior, be
 re- appointed as the Branch Auditors of Vikram Woollens, a Division of
 your Company.
 
 Resolutions seeking your approval on these items are included in the
 Notice of the ensuing Annual General Meeting.
 
 The observations made in the Auditors’ Report are self-explanatory,
 and, therefore, do not call for any further comments under Section
 217(3) of the Companies Act, 1956.
 
 COST AUDITORS
 
 In pursuance of Section 233-B of the Companies Act, 1956, your
 Directors have appointed M/s. R.  Nanabhoy & Co., Mumbai, and M/s. R.J.
 Goel & Co., Delhi, as the Cost Auditors to conduct the Cost Audit of
 Pulp and Fibre, Caustic Soda, Sulphuric Acid and Textiles for the year
 2011-12.  The approval of the Central Government for the appointment
 has since been received.
 
 APPRECIATION
 
 Your Directors wish to take this opportunity to express their sincere
 appreciation to the Central and State Governments, banks, financial
 institutions, stakeholders and business associates for their
 whole-hearted support and co-operation.
 
 Your Directors also wish to place on record their deep appreciation of
 the contribution of your Company’s employees at all levels which has
 been pivotal to your Company’s growth.
 
 For and on behalf of the Board
 
 Kumar Mangalam Birla
 Chairman
 
 Mumbai, 28th June, 2011